Trade deficit down on US energy boom. Time to export oil?

The US trade deficit fell to a four-year low in November, aided by growing US energy production. Some say lifting decades-old restrictions on oil and gas exports would close the gap further, but skeptics say more exports undermine energy security.

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A pump jack pulls crude oil from the Bakken region of the Northern Plains near Bainville, Mont. The US trade deficit fell to its lowest level in four years in November, driven by a falling reliance on foreign oil.

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To export or not to export? That is energy's question.

A week into the new year and the industry is already buzzing over one of 2014's defining issues: Whether America's newfound oil and gas wealth demands that more of it flow abroad.

The US trade deficit fell to a four-year low in November, the Commerce Department announced Tuesday, riding the tide of diminished oil imports and increased sales of refined petroleum products. It's why the oil and gas industry increasingly favors lifting decades-old bans on energy exports, citing a once-unthinkable vision of the US producing a surplus of energy.

But pumping homegrown oil and gas across US borders would erode the country's pursuit of energy independence, critics say, increasing reliance on foreign oil and expanding domestic drilling's environmental footprint. Added exports would boost corporate profits but hit consumers hard, these critics add, in the form of higher heating and electricity prices.

It's ultimately a policy question. Natural-gas export terminals need the Energy Department's authorization, and major exports of crude oil have been banned for decades. If drilling at home was the key energy issue of the 2012 election cycle, where that oil ends up will play a role in this year's midterm elections.

"Our generation will decide if America continues toward global energy leadership – a perhaps once-in-a-generation opportunity – or if we’ll remain content to play only a supporting role on the global energy market," Jack Gerard, president of the industry group American Petroleum Institute, said in an annual address Tuesday.

The US produced 6.5 million barrels of oil per day in 2012, according to the US Energy Information Administration (EIA). That is expected to rise to 9.6 million barrels of oil per day in 2019, largely on account of new drilling techniques that tap oil in low-permeability rock formations. Production will level off at or above about 7.5 million barrels per day through 2040, EIA projects. The new oil and gas production helped lower the trade gap by 12.9 percent to $34.3 billion in November.

The US is in the midst of a "21st century energy renaissance," Mr. Gerard said Tuesday, that could – if policies allow – "fulfill its potential as the world’s energy superpower.” The 2014 elections will play a key role in deciding that fate, Gerard said.

It's a point not lost on politicians from oil-rich states who trumpet America's new energy largesse.

“We need to act before the crude oil export ban causes problems in the US oil production, which will raise prices and therefore hurt American jobs,” Sen. Lisa Murkowski (R) of Alaska, the Senate Energy and Natural Resources Committee's top Republican, said Tuesday at the Brookings Institution in Washington, as reported by Bloomberg.

The oil export debate comes on the heels of an ongoing discussion over the export of natural gas, which the US is producing at record levels. After a two-year hiatus, the Energy Department approved three liquefied natural gas export terminals last year to serve gas-hungry Asian markets.

Not everyone is on board with the export craze. Crude oil exports were banned after the 1970s Arab oil embargoes made readily apparent the importance of a domestic energy supply. Allowing energy companies to ship their products overseas would reverse work toward energy independence, critics contend, and greater expose the US to global energy disruptions.

Loosening export restrictions might also raise domestic energy prices and would accelerate an already rapid spread of oil and gas drilling that has raised safety and environmental concerns.

"We are a long way from true energy security, and we should retain this domestically produced, strategic commodity until then," Daniel Weiss, senior fellow and director of climate strategy at the Center for American Progress, said in a statement. "Allowing oil exports now would be like celebrating a victory at half time."